Working Geeks are often guilty of this mistake. Working Geeks always have enough money to pay their bills, but many have no clue where it goes each month. Knowing where your hard-earned cash is going is the first step on the path to Easy Street.
|Most geeks fall into 2 categories: Broke Geeks (who are unemployed and spend most of the day in WoW) and Working Geeks (who are well-paid and spend most of the day staring at a computer screen for their employer). Although they are obviously adept computer users, both Broke Geeks and Working Geeks alas make mistakes with their money. Here are 7 of the most egregious examples, along with some suggested solutions:|
|1. Owning Every Battlestar Galactica Season, but Not a Single Stock||Geeks often have outstanding DVD collections of TV series and sci-fi and action movies, but the diversification often stops there. Sometimes, the geeks’ stock portfolios consist of only their employers’ stock and a 401K plan.||Think of stocks as collector’s items. You want to hoard and hold them as long as their value is increasing. Kinda like those old Superman comics stored at your parents’ house right now.|| |
Solution: Auto-invest in stocks using Sharebuilder. Or try Zecco, which is offering 10 free trades a month right now. The key is to just get started. Instead of buying an iPhone, try some AAPL.
|2. Not Tracking Their Cash|
Solution: Try one of the new online finance tools like Mint.com or Geezeo.com (or the old standards like MS Money or Quicken) to automatically track your spending habits. Or buy a cheap legal pad and write down every purchase you make for 2 weeks. You’ll be shocked.
|3. Buying Gadgets (read: iPhone) with a Credit Card|
|Nothing wrong with buying an iPhone. Darn cool phone. The problem is that geeks, usually Broke Geeks, buy their iPhones with credit cards that are practically maxed out. Now in addition to paying $399 for the phone, they are also burdened by a sky high interest rate as well.|
|Solution: Make a firm rule to only buy gadgets with cash or with a low interest rate installment loan from Lending Club.|
4. Having Pizza Hut on Speed Dial
|Broke and Working Geeks both make this mistake: they rarely cook their own food. Instead, both opt for more expensive and unhealthier options. Broke Geeks turn to ramen and soda. Working Geeks never pack a lunch and eat out for most meals.|
|Solution: Learn to grocery shop. Duh! Cooking suddenly becomes a lot easier when your fridge is adequately stocked. Here’s a cool tool for creating a quick grocery list.|
|5. Treating Extra Cash Like It Grows Back|
|The gold mines in Command and Conquer: Red Alert would replenish themselves if you waited long enough. Sadly, real cash bursts don’t work that way.|
|Broke Geeks get some extra cash and finally catch up on their bills. However, when Working Geeks get a fat bonus, they often immediately go out and splurge on a new $2,000 plasma TV.|
|Keep that up and you’ll never become a Rich Geek.|
|Solution: When you get a sudden cash burst, like a tax refund, store it up. Spend a small percentage (say 10%) on yourself as a treat, but definitely save or invest the rest.|
|6. NOT Shopping Online, Stupid.|
|I’m shocked at the number of geeks I know who spend all day online and then go to Best Buy to buy electronics. This doesn’t apply to every geek, of course, as many have discovered the deals at newegg, amazon, woot, etc.|
|When shopping online, don’t buy something just because it’s a deal. Do you really need 2 mp3 players (but it was $20 you say!)? No.|
Solution: Once you’ve decided on a purchase, use My Simon or Google Product Search (formerly Froogle) to find the lowest price or try a coupon finder like deal locker.
|7. A Portfolio Full of GOOG|
|So you’ve got some Google stock. That’s cool, but what else is in your bag of tricks? Geeks in their 20’s should be taking more risk with their investments (and I’m not talking partypoker here). An 80% stock allocation at age 20 is appropriate.|
|30-year-old geeks should have around 30% of their investment portfolio in bonds or fixed-income investments. This leaves 70% for stocks.|
|Solution: Have a mix of stocks and fixed-income assets. That 30% could also include money invested in loans through Lending Club. Average lender returns at Lending Club are over 12%.|
|So what have we learned? While you are engaged in your various endeavors to get ahead in the world, be sure that you pay close attention to some basic personal finance principles such as savings, budgeting and diversification. Sometimes, plain common sense can be your best guide, grasshoppers.|
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